Stock Market Automation:

Exchanges Have Increased Systems' Capacities Since the 1987 Market Crash

IMTEC-91-37: Published: May 10, 1991. Publicly Released: May 10, 1991.

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GAO assessed the improvements made to stock markets' automated systems to facilitate order routing and trade execution on days with volatile trading and large trading volumes.

GAO found that: (1) the National Association of Securities Dealers, the American Stock Exchange, the New York Stock Exchange, the Midwest Stock Exchange, the Pacific Stock Exchange, and the Philadelphia Stock Exchange improved their automated systems to increase their capacity; (2) to ensure that their systems operated as planned, all six markets conducted stress tests to simulate unprecedented trading volumes; (3) those tests indicated that the exchanges' automated systems could process volumes ranging from 4 to 160 percent above the highest daily volumes the exchanges ever processed; (4) system improvements made by stock markets to process higher trading volumes included installing more powerful computers, adding such electronic trade execution devices as specialist display books, and enhancing communications capabilities; and (5) stress testing helped to identify and correct system weaknesses before they cause data processing disruptions in an actual operating environment.

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